Areas of the UK with the highest levels of ill-health and disability have seen the biggest rises in long-term sickness according to a think tank’s latest analysis of the labour market, which also examined real-terms pay growth by geography.
The Resolution Foundation’s latest Labour Market Outlook examined recent changes to employment and economic inactivity due to ill-health in different parts of the country.
While overall employment levels in the UK have still not yet returned to pre-pandemic levels – the only G7 economy not to have done so – many traditionally low employment areas of the country such as Tees Valley and Durham (+1.6 percentage points) and West Central Scotland including Glasgow (+1.5pp) have experienced positive employment growth between March 2020, when lockdown restriction began, and September 2023.
Conversely, high employment areas such as Cheshire (-2.2pp) Surrey and Sussex (-1.9pp) have seen the biggest falls. As a result, Britain’s pre-pandemic trend of falling regional employment gaps has continued in recent years.
Sickness absence
People who work at home record lowest sickness absence rates
However, the post-pandemic change in the labour market that has troubled policymakers the most has been the rise in economic inactivity due to ill health. This has increased from 5.1% in the year to March 2020 to 5.8% in the year to September 2023 – an increase of around 300,000 people.
People who are inactive due to ill health tend to have extended periods without work. Compared to people who are unemployed, over twice the share of working-age people who are inactive due to sickness are workless for at least two years.
On average, UK-wide inactivity due to ill health as a share of the working-age population has risen by 0.7 percentage points since the year ending March 2020, from 5.1% to 5.8%.
But places with already-high rates of sickness-related inactivity like Merseyside (+1.6 percentage points), Tees Valley and Durham (+1.5pp) and West Wales (+1.5pp) experienced more than twice the national increase.
In contrast, Inner London East (-0.4pp) and West (-0.3pp) have seen falls in the share of working-age people inactive due to ill health.
Looking at the types of places that have experienced sharp rises in long-term sickness, the research found that these areas tend to have particularly high shares of people with a disability and a low share of graduates. The share of older workers in a local area, often considered to be a key driver of rising economic inactivity, is not associated with rising long-term sickness.
Charlie McCurdy, economist at the Resolution Foundation, said: “The UK’s employment rate is slowly returning back to its pre-pandemic level, a journey that has been prolonged by a worrying rise in long-term sickness. But some parts of the country have fared far better than others.
“While Britain’s employment gaps have continued to fall, its sickness gaps have widened. This has been driven by traditionally low employment areas like Tees Valley and Glasgow recording strong jobs growth, while areas like Merseyside that already had high levels of ill-health and disability experienced the sharpest increase in long-term sickness.
“It’s vital that national, regional and local policymakers understand these regional differences as they face up to the challenges and opportunities of local labour markets up and down the country.”
Real-terms pay growth
Using median pay according to real-time payroll data, the researchers also found that most parts of the UK have benefitted from the return of real pay growth, with UK-wide median earnings growing by 1.1% per cent in real terms, using the CPIH measure of inflation.
The one part of the country that didn’t was London, where typical monthly salaries fell by 0.3% on the year after adjusting for inflation. Pay growth in Northern Ireland, where pay is the lowest in the UK, was only 0.4%.
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